By Peter OBIORA InvestAdvocate

Lagos (INVESTADVOCATE)-The International Monetary Fund (IMF) Monday said it will support the Guinean economy growth with the second disbursement under the Extended Credit Facility (ECF) of SDR 18, 36 million (about US$27.85 million).

This is contained in Press Statement from the Fund and made available to www.investadvocateng.com in Lagos Nigeria.

Harry Snoek, Deputy Division Chief in the IMF’s African Department, at the conclusion of the IMF Mission to Conakry Guinea said the Guinean authorities and the IMF have reached agreement ad referendum on policies that, subject to approval by IMF management and the Executive Board in April, could be supported by the second disbursement under the ECF of SDR 18,36 million (about US$27.85 million).

“Guinea’s economy continued to grow at a good pace in 2012, although somewhat slower than anticipated due to difficulties in the mining sector. Inflation continued a downward trend during 2012, reaching just below 13 percent (year-on-year) in December” Snoek said.

According to him, Guinea’s good performance in the area of economic growth was the result of strong fiscal and monetary policies.

Snoek affirmed that Government revenue increased by more than expected; helped by improved collection efforts and despite considerable fuel tax losses.

He further affirmed that Expenditure stayed well within budget targets. “Bank financing of the budget was lower than programmed and excess liquidity in the economy fell. All but one of the quantitative performance criteria for end-December under the ECF arrangement was observed” he said.

Snoek said the Guinean authorities continue to make progress with their ambitious structural reform agenda, “although there were some delays; many of the reforms are needed to strengthen public financial management, enhance management of the mining sector and increase government revenue, expand electricity supply, develop Guinea’s abundant agricultural resources, and to improve the business climate” he said.

The Deputy Division Chief in the IMF’s African Department said mission welcomes the adoption of the new Organic Budget Law and the issuance by presidential decree of regulations on fiscal management and accounting, building on technical assistance from the IMF and other donors.

“Delays in completing the amendments to the new mining code, and in the adoption of the implementation regulations based thereon, were partly due to the intensive consultation process with stakeholders; this important reform should be completed as soon as possible” Snoek said.

The IMF mission recommends that Guinea rapidly implement the planned reform of the investment code, starting with the adoption of the Investment Policy Letter, which lays the basis for further measures planned for 2013 to make the country more attractive for investors.

“The prospects for 2013 are positive, although real growth is projected to be somewhat below the initial projection of 5 percent due to the slow-down in investment in the mining sector. The authorities continue to target a further decline in inflation, to below 10 percent at end-2013. However, the sharp increase in public sector wages agreed in December 2012 poses some risks to this outlook. Moreover, governance of the electricity company EDG and its financial situation will need to be strengthened quickly to control subsidies.

“The government’s reform program is set to continue, with key priorities being public financial management and tax administration, the completion of the legislative arrangements in the mining sector, the review of mining titles and conventions, electricity and agricultural sector reforms, and efforts to improve the business climate. The government is also planning to accelerate civil service reform, based on a just-started biometric census and the action plan of the High Commission on Public Sector Reform” the IMF said.

Following these, the IMF mission encourages the Guinean authorities, trade unions and employers organisations to develop a consultative and medium-term approach to wage negotiations, taking into account macroeconomic stability and fiscal sustainability.